In the Memorandum with IMF stated that Ukraine will introduce a funded pension system, which will develop jointly with foreign partners. The draft law “On mandatory accumulative pension system” may 20 was unplanned is included in the agenda of the current session of the Verkhovna Rada. Therefore, it is likely that it will be reviewed before the parliamentary recess.
The essence of the bill
The draft law proposes mandatory participation in a funded system of pension provision all categories of working individuals until they reach retirement age and attracting employers to the payment of pension contributions on a parity basis.
Therefore, employers will pay 2% of wages of employees and participants (workers) will pay contributions in the amount of 1% of the wage (income). At the request of the employee the amount of his self-contributions can be increased. The employer will be obliged to transfer to the same account for 2% of the gross salary.
In the accompanying documents to the bill specified that the contribution rate will increase:
2021 — 3%;
2030 – 4%;
2040 — 6%;
2050 – 7%.
In addition, in accordance with the initial version of the bill was planned to reduce the amount of single social contribution (ERU), in order not to overload the business taxes. But the Prime Minister of Ukraine Denis Shmyhal recently announced the new vision of the process.
“Discusses this option: 2% of current ERUs allocated to savings, not increasing the burden, neither for the firm nor for man, and 2% charge on income tax of physical persons (NDFL). The 4% guarantee in today’s prices in retirement to 1 million UAH”, – he explained.
Funded pension 2020: the nuances
However, voiced Megalam initiative leads to a decrease in revenues of the Pension Fund, which was constantly short of money. Perhaps it was this aspect became the reason of discontent of the IMF in the discussion of pension reform.
The issue of establishing a specialized structure became the second “stumbling block” for storage and administration of transferred funds – the Pension Treasury.
There are several points of view on reform. One side provides for carrying out of pension reform to create new structures, while opponents propose to expand the reform on the basis of already existing structures (state Treasury, PFCs, etc.) and not to produce unnecessary authorities due to the budget. Because of this debate the government, the Cabinet of Ministers is not ready to demonstrate the completed plan of pension reform.